 Welcome back everyone to theCUBE's live coverage in San Francisco for VMware Explorer 22, formerly VMworld day, 12 years. We've been covering VMware's annual conference. Going next level explores bigger theme, multi-cloud, another inflection point for VMware. And again, at the center of it is the partners, Zia Youssef is here, Senior Vice President, Strategic Ecosystem and Industry Solutions. You got the keys to the kingdom for VMware. Welcome to theCUBE. It's a pleasure. I mean, you guys are a legend here. This is my first time here, so it's a pleasure and excited to chat with you. Well, great to have you. Every single year since 2010, we've always had great commentary and discussion and sometimes contentious discussion around the role of partners vis-a-vis VMware's value proposition. VMware, dominant in the enterprise, data center. Everyone knows that. Dominant in hybrid was first there. Everyone knows that. Now, going to the next level, the customers, they stay with VMware. They don't really, they don't really leave. They've still got a great loyal base, but now the enterprise is going next gen cloud native. The partners are energized. The conversations we're hearing is huge. There's changes of roles, there's clarity on value proposition. Monetization is hopping. It's great stuff. What's going on? You're new, but you have a view of this before. Take us through what's going on in the partner network. What's the state of the union? Yeah, I think, thanks for the question. I think maybe just step back a second, right? The word partners is a big word. It covers all kinds of things. VMware has had a rich history of partnerships. Mostly technology related partnerships. So much of our products depend on other partners, OEM partners and so on. We've also had a rich history of our channel. So as you look at different channel partners, as you look at going through different parts of the segment, SMB and so on. In a cloud context, based on what's happening, we needed to take an integrated ecosystem approach. That's the word I use, right? And for me, it's a little bit like a spider's web, like no single strand in the web is that strong, but when you put it together thoughtfully in a very deliberate way, that's what an integrated ecosystem strategy is like. And so we've got our VCP partners, longstanding history, that machine continues. We've got our channel partners and OEM partners, that machinery continues. Obviously Dell, strategic partner, significant business. The parts of the puzzle that I've been focusing on is five other different pieces. So first of course is our hyperscaler partnerships. Long history with AWS, very successful history. We have GCVE with GCP. We announced I think three, four months ago that GCP was joining our VMware Cloud Universal and a big announcement yesterday about Microsoft doing the same. And hopefully we extend that. So as we work with this hyperscaler six or seven of these partners, it's a, as you can imagine, kind of a multi-dimensional chess game, if you will, a little bit competitive, mostly co-operative and stuff, right? The GSI is very exciting piece of it. The Essentials, the Deloitte, Deloitte announced a new business unit on VMware. HCL did the same. That energy level has really gone up. You see it at the show here as well. We recognize that these significant SIs play a huge role in the decision-making process with customers. And we want to enable them to build significant VMware businesses. It's a different game from that perspective. The last thing I'm pointing out is industry and verticals. I mean, this is not being necessarily an area because of the layer of the stack we've been in. Obviously, Telco is an end-to-end business unit for us. We have products. We have a go-to market on Telco. Public sector to some degree because you need all these three-letter agencies and the security and compliance. But as you look at financial services, as you look at retail, as you look at healthcare, we need to be aware of the workload. We need, especially on modern apps, especially on the edge. And so we're kind of doubling down on some of our vertical capabilities. So all of those things are connected as well, right? As you look at the SIs to the hyperscale of partners in a vertical context. What's the biggest change that you've seen? Because we've observed some partners aren't leaning out as they change their business in VMware, it's got new partners coming in, leaning in. So you've got, Dave mentioned Telco and you've got new use cases with Edge and multi-cloud. So some people kind of maybe age out or change their strategy. Some double down the core partner network and then new ones come in. What's been the biggest change that you can look at that, Alistica? Yeah, it's a great question, right? Because it's so multi-dimensional and there is no such thing as a GSI, global system, because they build products, sometimes they act as a reseller, they're a solution provider, also they provide services. So as their business model changes, we have to adjust how we engage with them. We can't put them in nice clean buckets. And that's what I'm doing with my colleagues here is how do we really enable them? And one of the things, I mean, I've done this stuff, I was at SAP for many years, we need to figure out how do we make them successful? Not just this is what VMware wants you to do, we need to kind of understand their business model and how do we fit into that? Because if they grow, then we grow with that. And that is honestly a little, it's a subtle point, but it's a little bit of a question. It's very nuanced, but you have to nail that. You've got to overlay the strategy where the enablement is, technically or product-wise, economics and conflict. And profitably, if their profitably is important to us, it's not just the growth. So Zia, I want to test the premise on you, something, John, I've been working on this notion of super cloud and we did an event earlier this month, but one of the aspects that's kind of nuanced and futuristic is if I'm a, let's say a financial services company and I'm going through a digital transformation, I would be looking strategically at what, say, Amazon did, taking its internal IT and then point it to the world. I would say, I have data, I have tools, I have software, I have expertise that's really unique and could be value-ad. And I would be thinking, how do I monetize that, create my own cloud? And I'm actually just going to throw it into a public cloud to do that. I've got mainframes running, I've got Oracle stuff on-prem. I'm not going to shift that stuff into the cloud. There may be some of it, but I've got transaction systems and proprietary data and a lot of it is running on VMware and I've got cloud stuff too. I would be looking at, okay, how do I build my own cloud and put my data, my tooling, my software in front of a new ecosystem, my own ecosystem that I can monetize? Are you seeing- Without spending the capex. Yeah, without having to build data centers. Right, exactly. I want to take advantage of the gift that the hyperscalers are given. Are you seeing any activity bubbling up on that regard? It's a really interesting question and I think the terminology that we've used around cloud smart kind of goes into that. So let me take what you said and frame it in a slightly different way. You can standardize on public clouds and everybody's using the same thing, you're using the same services and so on. Theoretically, that could lose some of your differentiation, right? I mean, especially for financial services companies that have built so much of their trading tests down to the milli, milli, millisecond and how do they do that and so on. So I think you have something there, right? So as they look at their technology and software strategy, yes, there's cost reduction aspects of it, there's refactoring aspects of it, that hygiene that needs to be done, as Raghu talked about from this cloud chaos to cloud smart, if you will. But then how do you differentiate on the business processes? How do you differentiate that then down into the workloads? And I think that's where to use an old term, it takes a village, right? You've got the system integrator that's providing this stuff. You've got, you know, other strategy firms like the BCG and McKinsey's of the world that have huge influence now. Then you've got technology players that are coming into that. And I think the cloud smart approach is to do exactly what you're saying. It's not just the refactoring, it's not just movement to the cloud. How do you retain your competitive edge from the processes, the models, the thinking that you've built up over many years? So I don't know if it's super cloud or what that means, but that, at the end of the day, this is about business processes. At the end of the day, this is about having a competitive edge in the market. It's industry cloud, right? So that's a good way to put it. I think industry cloud is a good way to do it. Why isn't there a security cloud? Why isn't there an insurance cloud? Why isn't there a fintech cloud? So I mean, if you look at like Goldman Sachs, Capital One, their CapEx is handled by AWS. Snowflake built their entire business on AWS, didn't spend a dime at CapEx, well, they spent a lot of operating expense for that CapEx and the fees, but still they became successful and then the rest is history. So I think people are seeing this idea of, I'll ride that back on the CapEx or the hyperscalers and then use the tooling from the partner network and what's available to then cobble together in an architectural engineered way, distributed computing way, a new way to do things. Okay, so if you believe that, of course we do, then you say, oh, it's on the balance sheet. So what we've been hearing from companies is like, hey, it's going to be on the balance sheet. I'd better have an income statement impact on the top line. So you start to see behavior change at the customer. It's not IT powering the business in the back office and terminals and some app, it's like, no, no, no, this is a digital business. So the integration of balance sheet income statement on the economics is driving a lot of de-behavior at the customers. So we see customers thinking this way and it's like we've never seen this level of business model refactoring as well as partner vendor selection, product, technology, mix at the same time. At this level. And VMware can be the connective tissue between the hyperscalers in the ecosystem and actually provide those cross-cloud connections. To the extent there's a business case there, that's what we're trying to sort of squint through. Is it going to be hybrid with on-prem and one-cloud or is there an advantage of going cross-clouds beyond just avoiding lock-in to take advantage of global infrastructure? So the next question is the TAM then bigger, which means the partners participate in that TAM. And we look at economics of this, right? I mean, there's a huge emphasis on cost. And I completely get that. I think as I've talked to customers, both now that I'm here, but before advising a range of companies, the innovation process, the time to impact is equally important, right? As you compete, there's no point in just getting your costs down if you're then getting beaten up in the market and you're not able to differentiate with new digital services. And this is where, call it super cloud, call it industry cloud. We need to connect up to the business processes and the business impact and not just, in my view, the cost infrastructure piece of it. And that we can't do on our own. We're not an apps company, so we're not SAP, we're not Oracle, but we need to work with those players to make sure that their workloads are optimized in the right cloud, in the right configuration. And that is a job to be done, as opposed to just, let's take it to the top. There's clearly a technology business case, especially if we're working with companies like VMware who's going to help me simplify my move to the multi-cloud. But there's also a business and economic impact in that even if it's not, even it could be simple as if I partner with Microsoft, I'm going to do more business, right? If I'm, you know, one of these industry clouds. So I see that as another potential tailwind. It's like where Andreessen says, all companies are software companies. To me, all companies are cloud companies now, increasingly. Yeah, I looked at the difference between cloud and apps and stuff. It's like, you know, this used to be infrastructure and then apps company and so on. We need to deliver with our ecosystem partners an integrated solution. And solution with the big S, not just the technology solution, but the broader, I mean, look at the change management. We talked about culture. I mean, if you don't get that piece right and the change management piece, you know, the rest of it is history. Well, it's got to be delivered as a service, which is huge implications as to how you deal with change management. And this goes back to my kind of first comment is, I really try and think of this by architecting the ecosystem. I don't like the word alliances, right? I mean, let's say kind of a one-to-one relationship, you know, let's do an agreement, let's go have dinner. But architecting the ecosystem, the spider's web, who are the different players? How can we complement each other? And if a Deloitte and a Microsoft want to do amazing business together related to VMware technology, I want to encourage that. And so those third-party connections become- You guys are contextualizing the ecosystem, basically. And I think from a customer standpoint, that's a benefit to them, in my opinion. In fact, Dave, remember at our supercloud.world event, urlsupercloud.world is the plug for the site, they can check it out. One of the comments from the Cloud Erotic panel was, we had a title of this, that's called the Innovator's Dilemma, you know, question mark, you know, you know. Best book ever written. And so one of the panelists said it shouldn't be, we should change it to the integrator's dilemma, because what's happening is that integration is now standard, table stakes, and but integrating the right things now matters, right? So integration for integration's sake isn't necessarily the end game anymore. It's kind of what you're getting at with the spider's web, is that integrating properly is a solution mindset. Look, integrating also, you know, you have to bring in data from that perspective, right? At the end of the day, data being the new oil, if you will, the integration allows that data to flow to the right place at the right time to make the right decision. Now we're not doing all of those pieces, but we are certainly enabling that. And as you especially start looking at what we can do on the edge and what we can do in a retail store and a factory and so on, those kinds of things come together. Okay Zia, take some time, we got a couple minutes left, only two minutes left. I want you to get some commentary directly to the audience around what specifically you're doubling down on that's new that you're investing in on the partner network or your partner strategy. What is a steady state that's being nurtured and farmed or whatever you want to use, but here's our core thing. Here's the area of improvement we're going to be cranking the handle on. Take us through that. I know your OEMs got telco, got new things going on. So maybe lay it all out. First of all, it has to be linked to VMware strategy. So as we transition on this journey to subscription, SaaS, ARR, we need to bring our ecosystem along to do that. That has business model implications, that has implications on how we engage with them, how we define success, how we value things. So that's an important journey. Secondly is we need to do a better job of enabling our partners. I mean, we have our partner connect, we do a pretty good job on the channel side. We need to do a better job on the GSIs is really understanding their business model, how they're engaging with their customers and provide them the technology, the support, the financial resources so that they can be successful. That's very important. Third is to connect the dots on the ecosystem. I've spent a lot of time in this event as well in joint meetings between system integrators and hyperscalers with our technology colleagues on Intel or NetApp or AMD and these are companies that we have a rich history with. We're trying to connect because that's how customers look at it. So connecting the dots between the ecosystem super important to us. And then look, there's a change management journey within VMware. We also need to understand how we can engage with partners in a more productive, effective way. How do we scale this up? I believe I think our leadership and Raghun Sumit, we are not going to succeed unless we have a profitable, engaged, passionate ecosystem. They got to make money. They got to be successful, have successful customers. They're in customers, your customers as well. All good. Question of where you're investing the most right now. If you had to put a high chart together, I mean, some of it's steady state, like it's a machine. Some of it's new, like Telco. I think, so again, rich history on the channel side. We continue to invest there. Very valuable to go do that. I think some of these newer areas around the system integrators, especially the large ones, the Wipros, the HCLs, Deloitte's Ascensions of the World, very important. The hyperscaler relationships directly leads into ARR. You saw the VMC, Cloud Universal will continue that journey. We have Google on great props from Google. And so look, I think we're not multi-cloud, unless we go do this, right? I mean, Raghu made a joke about this. We were single-cloud and now we're multi-cloud. We want our customers to be able to procure these integrated solutions through VMware. And our hyperscaler partners will continue to do it. That's when multi-cloud really become. And so the GTM motion, the discounting, the commission structure, all of that machinery is an important area for us. Zia, thank you so much for coming on theCUBE. I know you've been super busy. You've got to go out and hit all the partners. Say hello, Tom Pressing, you know, you got to hit the pavement. Say hello to everyone. It's been fantastic. The partners have too many parties and so, but that's a fun part of my job. I appreciate your time. You got good stamina. So you got to have that in this game. Not by the faint of heart here at VMware. Zia, thank you for coming on. Of course. This is theCUBE coverage back after lunch after the short break, day two of three days of live coverage here in Moscone West on the street floor, level of the event. I'm John Furrier with Dave Vellante. We'll be right back.